Firms hit back at rising service charges

Firms are upset by the perceived high cost of utilities and waste disposal Keystone

As the economy contracts, Swiss firms and consumers have inundated the price watchdog with complaints about the cost of services supplied by monopoly providers.

Some 1,535 protests were sent in the first six months of this year, double the number from the same period in 2008. Charges leveled have not leapt recently but the increase in complaints show that long-term rises were suddenly starting to bite.

Price watchdog Stefan Meierhans said small and medium sized enterprises (SMEs) figured prominently in his daily correspondence. They are mainly upset by the perceived high cost of utilities and waste disposal, fixed by local authorities.

“We see many SMEs looking more carefully at cost development. Cost saving is becoming an ever more important topic, so they tend to look more carefully at their bills in periods of slow economic growth,” he told swissinfo.ch.

In comparison to the high level of complaints received so far this year, the watchdog office handled 1,281 in the whole of 2008.

Official statistics show prices across the board remaining fairly static in the last 12 months, but these compilations do not distinguish between monopoly-run services and those provided by a number of competing enterprises.

Long-term problem

Certain fields, such as health care and electricity, have seen spiraling costs in recent times. Meierhans believes that the public attention this has generated has led many businesses to review their entire expenses portfolio as they look to make savings.

“People read about the crisis and companies are feeling the effects so they write to us, for example, about increases in waste disposal prices in the last few years,” he said.

Thomas Pletscher of the Swiss Business Federation, economiesuisse, agreed that the roots of the recent flood of recent complaints can be traced back a decade or more.

“Administrative charges for businesses has increased much more than domestic consumer prices for a number of years. Companies are now complaining about this long-term increase because their businesses are suffering,” he said.

Pletscher also believes the situation is about to get worse as the strings on the public purse tighten.

“The issue of service charges from government institutions is a constant worry to us. The government is under pressure to keep taxes low so they raise the prices of services they render,” he said.

Indirect costs

Both experts gave examples of how costs have also risen indirectly – ranging from drug companies withdrawing small packets of pills from the market and only offering larger boxes, to discounts that were once offered to firms for registering patents online suddenly being removed.

Pletscher and Meierhans, both general advocates of reducing monopolies, also sounded an alarm bell about the possible adverse effects of privatisation in some cases.

Even the long, slow process of liberalising sectors such as the electricity market has failed in some cases to deliver lower costs. Electricity supply has now passed from cantonal government monopolies to private companies but prices have risen in many cases thanks to a general hike in power production worldwide.

Meierhans warned that opening other markets to competition would not necessarily lead to a reduction in bills for all.

“We have to be very cautious about the consequences liberalising, for example, the mail service. It could lead to higher prices for delivering the mail to more remote regions of the country,” he said.

Matthew Allen, swissinfo.ch

Price watchdog

In November 1982, Swiss citizens voted in favour of a people’s initiative against price abuse.

730,938 citizens voted supported the initiative and 530,498 were against.

Voters rejected a counter-proposal put forward by the government and parliament that foresaw the monitoring of prices only at times of strong inflation.

The first price regulator, who took up his position at the end of 1972, was Leo Schürmann. He was later appointed director-general of the Swiss Broadcasting Corporation. Rudolf Strahm took over in 2004 and was replaced by Stefan Meierhans on October 1, 2008.

The price regulator deals with markets monopolised by individual concerns or a few enterprises. Much of the office’s work concentrates on local authority supplied services.

In the case of governmental organisations, the regulator only has the power to issue recommendations, but he could order price reductions in the private sector.